Becoming debt free is a priority for many people. They don’t like the feeling of being in debt and they don’t like the prospect of owing more than they can afford. You need to make sure that you are in a good place to start looking at your debt solutions. When you start comparing how you are going to manage your debt, you need to look at an all-round solution that is going to benefit you and your finances. After all, there is no ‘easy’ way to get out of debt, so you need to explore all options before you commit to a process. Each person’s financial circumstances are different, so having a process in place that works for you is fundamental.
The prospect of debt, for many, is something of a taboo subject. No one likes to admit as to the extent of debt that they are in. but, while you don’t have to go round updating your social media sites about your debt problem, you can take proactive steps to reduce your debt.
Be Honest With Yourself
One of the best things that you can do is to assess your financial situation and be honest about it with yourself. There is no point denying your debt problems. You need to face up to them so that you can start paying them off. Admitting to yourself that you are in a spot of financial trouble is tough, but don’t be too hard on yourself. This can be sorted. While it may not be dealt with overnight, you can take positive steps in ensuring that your finances are in the best possible situation.
Analysis is the Key
Making sense of your debt and your budget is vital during this time. Whether you note it down on a piece of paper, or download an app, there are some positive ways that you can make sense of your finances. You can ensure that you are keeping abreast of your finances in a more comprehensive way.
Budgeting and analysis is important during this time. You don’t need to have a qualification in accounting to figure out your average spends. Simply calculate your income, your outgoings and look at the total of both figures. If your outgoings exceed your income or there is a nominal sum between the two, it’s time to take action. After all, you don’t want to face further hardship. Look at ways that you can slash your outgoings so that you can free up more of your income.
Can you make cutbacks to your non-essential expenditure? If so, get rid of them. Do you need two cars, for example? Do you have a wealth of credit agreements for various household goods? Are you tied into expensive contracts? Start looking at your outgoings and decipher ways in which you can reduce them drastically. If you aren’t being brutal enough, get a friend to help you with this. They will be able to point out the non-essential items on your list.
Reducing Your Costs
Okay, so you’ve made deep and savage cuts to your outgoings, but now it’s time to look at your essential costs. Is there any leeway with the amount that you pay? Can these be reduced in some way? Take a look at comparison sites and start switching your bills. While you may think that the sum is not a great deal, when you do this for all of your expenditure you are sure to see positive changes in the amount of disposable cash that you have.
Once you have done this, its crunch time. You now need to figure out which debt solution is best for you. The next step is assessing how to become debt free.
Repaying Your Debt in a More Efficient Way
Credit cards, store cards and overdrafts can be costly. These are typically the most interest-heavy forms of credit. The best way to consolidate credit card debt and other forms of high interest debt is to seek out some sort of debt management program. These can be effective in helping you manage your finances. Always make sure that you pay off high interest debts first as the longer that you take to repay these, the more these loans will cost you.
0% Balance Transfers
0% transfers are good for minimising the interest on your credit card loans. But, you will need to make sure that you don’t have a balance transfer fee attached to the cards that you are using. Setting up a direct debit is the best way of ensuring that you don’t plunge yourself into further debt.
If you don’t like the idea of moving your credit cards to another credit card, or you have multiple loan agreements from a wide range of different creditors, it may be wise to seek out debt management in the form of loan consolidation. This can help you deal with one creditor and one rate of interest. The rates of interest vary dependant on the provider. So, do your homework and make sure that you get a good deal. This can be an excellent means of making sure that you are managing your debt in a more inclusive fashion.
Talking to Your Creditors
If your financial situation is something of a temporary one, you may need to speak to your creditors directly. They may freeze interest or waiver some of the fess. Communicating with your creditors directly is one of the best ways to handle your monetary affairs. All loan providers are in the business of making money, but they also want to make sure that they recover their costs. It’s in their interests to be lenient and to listen to ensure that they get their money back. Of course, if you have taken out payday loans and the like, this may be more difficult to sort out in an amicable fashion.
Comparing your debt solutions can be difficult, but making the right choice is imperative. Choosing the right solution for you is the next step to becoming debt free.